All of your hard toils can only be paid off after becoming the owner of your dream house. So, it is necessary for you to do the needful for making that property completely yours, without any further legal issues. The title of your property provides the legal proof that you are the owner of that particular property.
What is Title Insurance?
Although the Title Insurance exists in all the industrialized countries, it is more popular in the countries of the first world. This insurance is availed by the clients for protecting the most important investment of their life, the investment on their homes. This insurance protects the owners and the mortgage lenders against financial loss which has been resulted from any kinds of deflects in the title to the real estate. Usually the other policies like- medical insurance or life insurance are there for securing the life of the beneficiaries, after the death of the insurance holder. Title insurance on the other hand covers the events relating to the title which has already occurred.
How Does Title Insurance Work?
At the time of purchasing this insurance, the agent or the company will conduct a search on the public records of a particular property and its chain of ownership. While making this search, if any kind of disputes or defects are detected by the company then, they will either fix them before issuing a title policy or they can also exclude them from the coverage of the policy. Once it has been verified that the property title is clean then only the company will issue you and your lender the required policy for protecting the property. These insurance policies protect you and your lender financially from any unknown claims or defects existing at the time of purchase.
Types of Title Insurance:
This insurance mainly comes in two different types. So, there is a need for you to make up your mind before picking a certain type of policy, which will meet all your needs.
- Lender’s Policy: The necessity of availing a lender’s policy comes when a lending institution is looking out for a reliable way to insure their security interest in a particular property. This policy is there for protecting the bank or the other lending institution as long as they maintain an interest in the property.
- Owner’s Policy: As a buyer it is quite natural that you would like to protect your investment along with the ownership right, which comes along with it. Thus, it is beneficial for you to purchase an owner’s policy, as, it has the capacity of protecting the homeowner’s right as long as your heirs have their interests in your property.
There are some different customs, related to the purchase of a title insurance for securing your home. In some areas of the country, it is customary for the seller to purchase the owner’s policy for the buyer, whereas in other areas the buyer purchases this important protection.
Factors Affecting the Premiums of the Title Insurance:
The actual amount of the premium which needed to be paid by you on a particular home title insurance policy depends upon the underlying value of that particular property. However, since the cost is there for covering the pre-transfer works, such as- title search, examination, and curing defects, property value is not one of the most important factors for you to get worried about.
But, certainly there are some factors which can actually affect the premiums:-
- Amount of work which is necessary for conducting a through title search and examination.
- Some other important works, like the legwork, required for fixing the existing defects or faults in a particular property.
- The total amount of work, necessary for maintaining an up-to-date information, specially on the covered properties and the adjacent properties.
The Working Area of a Title Search:
It is quite natural a fact that you would like to avoid buying a faulty or defective piece of property. In order to save the buyers from various legal issues, Title Insurance has come into existence. A title search has the potential for revealing many of the problems related to a particular piece of property. You can conduct a title search from your own but sometimes it might be a better option for you to hire a qualified third party for conducting a title research.
The third party may conduct the search about knowing the facts like-
- Whether the deeds or the legal documents of the property are forged or not.
- Undisclosed or missing heirs.
- Finding some errors in indexing public records.
- Detecting some mistakes in recording legal documents.
Title insurance is different from the other lines of insurance as it emphasizes the risk prevention rather than the risk assumption.
This insurance policy is mainly necessary for providing a security to the buyer and the lender, where a lot of money is at the stake.